HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

China Railway Signal & Communication / Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/china-railway-signal-communication-co-ltd" target="_blank" data-smartkarma-citation="entities:613:1" rel="noopener">China Railway Signal &amp; Communication (3969 HK)</a>'s latest order backlog is estimated to be Rmb173.7bn, enough to cover FY24F revenue by 4.4x.</li>
<li>Gross margin has sustained expansion, reaching a record high of 27.8% in 1Q24. Higher R&amp;D expenses will benefit its medium-term earnings.</li>
<li>Net cash equals 59% of the share price, allowing it to maintain over 50% payout and potentially higher going forward. Operating cash flow has also turned around to positive.</li>
</ul>



China Railway Signal &amp; Communication (3969 HK)'s latest order backlog is estimated to be Rmb173.7bn, enough to cover FY24F revenue by 4.4x.
Gross margin has sustained expansion, reaching a record high of 27.8% in 1Q24. Higher R&amp;D expenses will benefit its medium-term earnings.
Net cash equals 59% of the share price, allowing it to maintain over 50% payout and potentially higher going forward. Operating cash flow has also turned around to positive.


China CRSC (3969 HK): Well Worth the Premium

Asian Hedge Fund Manager, Long Short Equity, Macro

David Mudd

Thematic (Sector/Industry)

<ul>
<li>China has unveiled measures to emphasize a major push for passenger and freight movement by railroad</li>
<li>Rolling stock companies  play catch-up from the COVID under-investment years</li>
<li>High speed freight trains on near term horizon to compete with highway for e-commerce business</li>
</ul>


China has unveiled measures to emphasize a major push for passenger and freight movement by railroad
Rolling stock companies  play catch-up from the COVID under-investment years
High speed freight trains on near term horizon to compete with highway for e-commerce business


<ul>
<li>CSRC's Market Value Management Guidelines will indirectly benefit the H-share stocks with their A-share counterparts with a P/B of below 1x.  </li>
<li>Chinese banks dominated the list with below-book A-shares. <a href="https://www.smartkarma.com/entities/china-everbright-bank-co-ltd" target="_blank" data-smartkarma-citation="entities:16221:1" rel="noopener">China Everbright Bank (6818 HK)</a>, <a href="https://www.smartkarma.com/entities/china-citic-bank-corp-ltd-ea6c25fd-4b20-45cb-a4a6-df7a60136f03" target="_blank" data-smartkarma-citation="entities:653:1" rel="noopener">China Citic Bank H (998 HK)</a>, and <a href="https://www.smartkarma.com/entities/industrial-and-commercial-bank-of-china-limited" target="_blank" data-smartkarma-citation="entities:1119:1" rel="noopener">ICBC (H) (1398 HK)</a> are the prime beneficiaries.</li>
<li>Infrastructure construction companies <a href="https://www.smartkarma.com/entities/china-railway-construction-corp-limited" target="_blank" data-smartkarma-citation="entities:263:1" rel="noopener">China Railway Cons Corp (1186 HK)</a>, <a href="https://www.smartkarma.com/entities/china-railway-group-ltd-h" target="_blank" data-smartkarma-citation="entities:264:1" rel="noopener">China Railway Group H (390 HK)</a>, and <a href="https://www.smartkarma.com/entities/china-communications-construction-co-ltd" target="_blank" data-smartkarma-citation="entities:265:1" rel="noopener">China Comm Cons (1800 HK)</a> are also well-positioned to gain.</li>
</ul>


CSRC's Market Value Management Guidelines will indirectly benefit the H-share stocks with their A-share counterparts with a P/B of below 1x.  
Chinese banks dominated the list with below-book A-shares. China Everbright Bank (6818 HK), China Citic Bank H (998 HK), and ICBC (H) (1398 HK) are the prime beneficiaries.
Infrastructure construction companies China Railway Cons Corp (1186 HK), China Railway Group H (390 HK), and China Comm Cons (1800 HK) are also well-positioned to gain.


China & HK Strategy: Names to Watch for Market Value Management

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Cssc Offshore & Marine Engg Group / Event-Driven

<ul>
<li>Huge volumes continue to be traded on the mainland share markets. SOUTHBOUND volumes dropped sharply but net buying continued strongly.</li>
<li>Stocks in HK and mainland markets fell heavily with HK's main indices down 6-7% and China's blue chip indices down 3.3-3.6% (CSI 500 - 4.8%).</li>
<li>Within H/A Pairs, after outperforming the HK/mainland spread for weeks, spreads got shellacked. Worst week in a long time (-3.7%), perhaps on the back of "disappointing" lack of stimulus measures.</li>
</ul>


Huge volumes continue to be traded on the mainland share markets. SOUTHBOUND volumes dropped sharply but net buying continued strongly.
Stocks in HK and mainland markets fell heavily with HK's main indices down 6-7% and China's blue chip indices down 3.3-3.6% (CSI 500 - 4.8%).
Within H/A Pairs, after outperforming the HK/mainland spread for weeks, spreads got shellacked. Worst week in a long time (-3.7%), perhaps on the back of "disappointing" lack of stimulus measures.


A/H Premium Tracker (To 22 Nov 2024): AH Premia Rise Sharply; Hs Shellacked Vs As In Most Sectors

Asia Pac IPO & Placement Research, China biotech, Aequitas Research

Ke Yan, CFA, FRM

Asia Pac IPO & Placement Research, China biotech

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Quantitative Analysis

<ul>
<li>We analyse the changes of A-H premium on 150 stocks over the last week. The average A-H premium was 103.7% as of Nov 22nd.</li>
<li>The average A-H premium changed by -1.0ppt week-on-week, led by communication services, industrials, financials and offset by consumer staples, health care, utilities.</li>
<li>We highlight weekly changes in A-H premium for InnoCare, Shanghai Pharma, First Tractor, Air China.</li>
</ul>


We analyse the changes of A-H premium on 150 stocks over the last week. The average A-H premium was 103.7% as of Nov 22nd.
The average A-H premium changed by -1.0ppt week-on-week, led by communication services, industrials, financials and offset by consumer staples, health care, utilities.
We highlight weekly changes in A-H premium for InnoCare, Shanghai Pharma, First Tractor, Air China.


A-H Premium Weekly (Nov 22nd): InnoCare, Shanghai Pharma, First Tractor, Air China

China

China Railway Signal & Communication Corporation Limited manufactures rail transit related systems. The Company researches, develops, designs, manufactures, sells and installs rail transit communication and signal systems. China Railway Signal & Communication also provides consulting, design and supervision work for urban transit projects and mainline railway projects.

China Railway Signal & Communication (3969 HK)

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

China Railway Signal & Communication (3969 HK)

China CRSC (3969 HK): Well Worth the Premium

China CRSC has secured backlog and sustained margin improvement. High R&D expenses will drive the medium-term outlook. Net cash equals 59% of the...

Osbert Tang, CFA

China Railway Stocks Back on Track

China has announced two significant launches in its High Speed Rail network. The HK-Beijing and HK-Shanghai sleeper trains will cut travel time in...

David Mudd

China & HK Strategy: Names to Watch for Market Value Management

SASAC issued "Several opinions on improving and strengthening the market value management of listed companies controlled by central enterprises"...

Osbert Tang, CFA

A/H Premium Tracker (To 22 Nov 2024): AH Premia Rise Sharply; Hs Shellacked Vs As In Most Sectors

AH premia fell on the week after a HUGE jump the previous week. Wide H discounts narrowed more than small H discounts. A "normal" week for beta vs...

Travis Lundy

A-H Premium Weekly (Nov 22nd): InnoCare, Shanghai Pharma, First Tractor, Air China

We analyzed A-H premium changes in the past week and highlight A-H premium changes for InnoCare, Shanghai Pharma, First Tractor, Air China.

Ke Yan, CFA, FRM

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

China CRSC (3969 HK): Well Worth the Premium

​China CRSC has secured backlog and sustained margin improvement. High R&D expenses will drive the medium-term outlook. Net cash equals 59% of the...

Osbert Tang, CFA

China Railway Stocks Back on Track

China has announced two significant launches in its High Speed Rail network. The HK-Beijing and HK-Shanghai sleeper trains will cut travel time in...

David Mudd

China & HK Strategy: Names to Watch for Market Value Management

SASAC issued "Several opinions on improving and strengthening the market value management of listed companies controlled by central enterprises"...

Osbert Tang, CFA

A/H Premium Tracker (To 22 Nov 2024): AH Premia Rise Sharply; Hs Shellacked Vs As In Most Sectors

AH premia fell on the week after a HUGE jump the previous week. Wide H discounts narrowed more than small H discounts. A "normal" week for beta vs...

Travis Lundy

A-H Premium Weekly (Nov 22nd): InnoCare, Shanghai Pharma, First Tractor, Air China

We analyzed A-H premium changes in the past week and highlight A-H premium changes for InnoCare, Shanghai Pharma, First Tractor, Air China.

Ke Yan, CFA, FRM

China CRSC has secured backlog and sustained margin improvement. High R&D expenses will drive the medium-term outlook. Net cash equals 59% of the...